Kenya has cancelled plans to import crude oil from Iran following threats of sanctions, an official at the Kenyan energy ministry has said.
The outline deal signed last month was to import about 4m tonnes of oil from the Iranian National Oil Company.
But the US embassy in Nairobi had warned it was important to cut revenue to the Iranian government.
The US and the European Union have just tightened sanctions on Iran over concerns about its nuclear programme.
"Because of international pressure, we have withdrawn that understanding," AFP news agency quotes Patrick Nyoik, the energy ministry's permanent secretary, as saying.
On Sunday, a complete European Union oil embargo on Iran came into effect - in response to US legislation, which sanctions any entity that deals with Iran's Central Bank.
"There are sanctions that are in place for people that are buying oil and products from Iran - there would be repercussions," outgoing US ambassador to Kenya Scott Gration warned earlier on Wednesday about Kenya's oil importation plans.
Last month, Kenya's only refinery said that it would start buying its own crude oil, Reuters news agency reported.
According to Kenya's Business Daily newspaper, under the proposed contract Tehran had been offering Kenya an extended credit facility of 90 days.